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31. 10. 2019 11:13

Speech of Prime Minister Babiš at FT Business Regulation Prague Forum

Speech of Prime Minister Babiš at FT Business Regulation Prague Forum, 31 October 2019.
Speech of Prime Minister Babiš at FT Business Regulation Prague Forum, 31 October 2019.
Prime Minister of the Czech Republic Andrej Babiš gave a speech at the Financial Times Business Regulation Prague Forum on Thursday 31 October in Prague.

Ladies and Gentlemen,

Thank you very much for inviting me to this event. I see it as very beneficial because we still have much to discuss on business regulation and must still look for places to improve. We are gathering inputs we can use. I think that today's conference will also be very helpful in this.

The kind of legislation we will have, and the rules and regulations in our country, fundamentally affect the functioning of the economy and thus the wealth of our people. We want the Czech Republic to be a good place for all to do business - from sole traders, to small businesses, up to large corporations and foreign investors.

I will briefly start with foreign investors. We are one of the countries with the largest share of foreign direct investment. These are often important employers and their contribution to the economy is unquestionable - historically, foreign investors brought us know-how, new technologies and engaged a number of domestic companies, which was then positively reflected in employment. It is often said that these are just assembly plants. This is no longer quite as true today, and we are doing everything we can to avoid this being the case. We aim to support innovative manufacturers and also to create conditions for companies that want to invest here in research and development and to bring in innovation. We have succeeded in changing the system of investment incentives and we have open arms for those who want to cooperate with our research institutions and implement higher added value. The Czech Republic is a good place to do business - our economy is stable, we continue to have very good technical university graduates, as well as a rich tradition in many sectors.

Not only domestic but also orginally foreign investors have understood this and often expand their operations in our country, adding research and development to their original production activities. They are increasingly active in other areas, supporting the local community, contributing to maintaining a quality environment around their plants, supporting volunteering by their employees, paying for cultural events, simply being responsible with respect to society. I am once again try to motivate these investors from my own position. This year, for the first time, I presented the Responsible Investor Award. There is no need for regulation, just a good example, public-private motivation and cooperation. An example of this cooperation is most certainly the National Development Fund now being established. The largest banks operating in the Czech Republic have promised to invest billions in a fund that will finance public PPP projects. And other companies, not just from the financial sector, are also applying for the possibility to participate financially in this fund. From this it can be seen that this type of partnership is mutually beneficial.

On the other hand, the Czech Republic is a country with a large number of small- and medium-sized enterprises, which make up the majority of the business sector. For these, the most pressing issue is that of the administrative burden. We will continue to reduce the administrative burden on entrepreneurs, which has long been one of the priorities of the Czech government.

If I come back to the topic of regulations in general, it is good to look at specific data.

One way to measure the business environment is the competitiveness ranking from the World Economic Forum (WEF). This index assesses the environment of 141 economies and provides an insight into their productivity and prosperity.

Singapore, the United States and Hong Kong ranked best in the competitiveness assessment. Among the countries of Europe, the Netherlands and Switzerland are in the best position. Germany is also in the top ten. The Czech Republic ranked 32nd, the first among the Visegrad group of countries, and has ranked around 30th for some time now. We are leaders in macroeconomic stability, but according to this assessment we are lagging behind in areas such as state regulation, taxes, legislation and e-government.

 In another way, based on a series of open questions and answers from respondents, the OECD works with the PMR - Product Market Regulation index, which is based on hard data. In this, the Czech Republic did not turn out badly at all. According to it, our rate of regulation is below the OECD average. In 2018, the Czech Republic ranked 11th among the world's most advanced countries within OECD countries.

This comparison demonstrates very well that in certain areas information on the level of economic regulation in our country may be more of an impression than facts based on an international comparison of hard data. However, such information is also important because even general awareness of the regulatory environment in our country affects its performance.

The fact that we are now moving in the right direction is confirmed by the fact that in 2019 several major international credit rating agencies confirmed the Czech Republic's current high A rating; Moody's even increased its rating when recognising government reforms aimed primarily at supporting investments with higher added value and low debt.

But we continue our work. The digitisation of state administration and data sharing between state administration entities will lead to the elimination of many obligations and a reduction in statistical surveys. For example, it is now possible to establish a business and register for tax obligations online so that an entrepreneur does not have to go around offices. Next year a portal will be launched that will make it easier for entrepreneurs to communicate with the tax office.

Construction permits are another area we are working on intensively, where entrepreneurs are troubled by their complexity and the long delays in processing construction permits. At present, dealings with the building authorities are for the most part a nightmare for sole traders.  Changes are being prepared that will simplify and speed up the process so that a trader need only submit his project and the construction authority handles all other mandatory statements for him.

These and other tasks for reducing the administrative burden on entrepreneurs and reducing regulations are therefore ahead of us. Deputy Prime Minister Havlíček will, I believe, talk about other priorities, current problems and plans for the future.

Thank you for your attention.

Andrej Babiš, Prime Minister

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